U.S. Carriers Oppose Subsidy for Air India's Boeing Buy: Report

U.S. airlines are opposing the U.S. government's subsidies to debt-laden Indian state carrier Air India for its purchase of Boeing aircraft, the Wall Street Journal reported on Monday.

The Air Transport Association, an industry body, has written to the chairman of the U.S. Export-Import Bank, asking him to slash all subsidies to foreign buyers of Boeing jets, including Air India, the Journal said, citing a copy of the letter.

The letter called on the Export-Import Bank to reverse its approval of as much as $3.4 billion in guarantees for loans to Air India, the report said.

Air India, which was censured by the federal auditor for incurring unnecessary costs, has a debt burden of $9.5 billion. A group of ministers are currently formulating a financial restructuring plan for the ailing carrier.

It had ordered up to 50 long-range Boeing aircraft worth about 300 billion rupees ($6 billion) in 2005. Indian Airlines, which was later merged into Air India, had in 2006 placed a separate order for 43 Airbus aircraft worth 83.99 billion rupees.

Air India's losses and reports of management problems should disqualify the company for U.S. support, the ATA said in the letter, according to the Journal.

The letter said the bank's support for foreign airlines hurt U.S. carriers, the Journal reported.

The Export-Import Bank's general counsel said in a response letter, also seen by the Journal, the bank stood by its decisions and processes, although it would investigate some of ATA's assertions about its procedures.

An Air India spokesman was not immediately available for comment. A Boeing official declined comment to Reuters.

($1=50 Indian rupees)

(Reporting by Anurag Kotoky in NEW DELHI; Editing by Aradhana Aravindan)

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